External Insurance Act Judicial Management Regulations Forms & - - PowerPoint PPT Presentation

 External Insurance Act  Judicial Management Regulations  Forms & Fees Regulations  Classes of Insurance Business Regulations  Capital Requirements for External Insurers,

Insurance Managers, External Insurance Brokers

This presentation applies to all regulated External Insurance licensees in this jurisdiction and, those financial institutions and individual body corporate who propose to carry on external insurance business from within or outside The Bahamas. The detailed information presented is intended to apprise you of:

2009 and External Insurance Regulations, 2010 and, Information.

Commission of The Bahamas vis-à-vis the External Insurance Act, 2009 and the External Insurance Regulations, 2010.

• versight of the External Insurer’s business affairs.

At the outset it is important to note the following:

 The Information presented is based on The Insurance

Supervisory and Regulatory system of the Commonwealth of The Bahamas by means of The Insurance Commission of The Bahamas, ―the Commission‖ or ―ICB‖ established under section 4 of the Insurance Act (Act No. 16 of 2005 as amended July 2, 2009).

 The responsibilities of The Insurance Commission of

The Bahamas are not only with respect to overall risk management but also to exercise prudential

• versight and, to ensure prudential soundness and

supervisory regulations from within and outside The Bahamas.

The Insurance Commission of The Bahamas, in exercise of the powers conferred statutorily by Section

• n 46 of the External

rnal Insuranc rance Act, 2009, made External Insurance Regulations and provisions with respect to the following:

• The licensing, re-registration, operation, conduct and activities of all external

insurers.

• The licensing, re-registration, operation, conduct and activities of Insurance

Managers.

• The licensing, re-registration, operation, conduct and activities of External

Insurance Brokers.

• Prescribing anything that is required by the External Insurance Act, 2009 Act to

be prescribed.

• Exempting any person or class of persons or business or class of business from

any provision of the External Insurance Act, 2009.

• Constituting the breach of any provision of the External Insurance Act, 2009 or
• f any regulation to be an offence.
• Prescribing anything that is required with respect to the financial obligations or

requirements under the External Insurance Act, 2009.

• Where there is no provision, or not sufficient provision of the External Insurance

Act, 2009 in respect of any matter or thing necessary to give effect to the External Insurance Act, 2009, the manner or form in which the deficiency is to be supplied.

 Statutorily, regulations may contain such incidental or

supplemental provisions as appear to the Commission to be expedient for the purposes of the regulations.

 Additionally, the Commission may from time to time

issue rules, guidelines and directives for the better management of licensees or insurance managers and external insurance brokers under the External Insurance Act, 2009.

 That essential to The Insurance Commission of The

Bahamas’ regulatory framework are strict adherence by all body corporate to the External Insurance requisites and, the monitoring and compliance with The Bahamas’ applicable Laws and Regulations.

in the past year especially when compared with the External Act, 1983; therefore it is crucial, I repeat crucial, that all external insurers must pay close attention to the new External rnal Insura urance nce Laws that will certainly be beneficial to every stakeholder.

The Bahamas, nor hold himself out as carrying on external insurance business from within The Bahamas, without a license under the External Insurance Act, 2009.

anti-money laundering legislation are being complied with.

requirements have not been satisfied, i.e. you must be compliant.

For the purposes of this presentation, of note are the following DEFINIT NITIONS ONS fo for r the purp rposes

• ses of

f the G GUIDEL DELINES INES concerning: RE RE-REGISTRATION REGISTRATION, , AS ASSESSMENT ESSMENT OF OF RESPONSIBL PONSIBLE E PERSONS SONS an and RESIDENT IDENT REPRESEN RESENTATIVE TATIVE INF NFORMATION. ORMATION.

―body corporate‖ means any body corporate including a body corporate constituted under the law of a country or territory outside The Bahamas.

―carry y on externa rnal l insu suran ance ce busines iness‖ and its derivatives, includes:-

• pening or maintaining a place of business or an office, or appointing or using a

representative in The Bahamas, whether or not insurance business is being arranged in or from The Bahamas; and

• the use in The Bahamas of any business description or business title, in any

language whatever, of the words ―insurance‖, ―assurance‖, ―indemnity‖, ―guarantee‖, ―underwriting‖, ―reinsurance‖, ―surety‖, ―casualty‖, or any derivatives, or any expression which connotes or is intended to connote insurance business.

• the making in The Bahamas of any representation in any handbill, letter, letterhead,

circular, advertisement, paper notice, or in any manner whatsoever offering, either directly or indirectly, to arrange contracts of insurance;

• the assumption of the obligation of a company to cover risks or liabilities in any class
• f insurance business; and
• insurance business where the risk is located outside The Bahamas.

―class of insurance business‖ means any class of insurance business as determined by regulations.

Bahamas (ICB) established under section 4 of the Insurance Act (Act No. 16 of 2005).

insurance business.

rnal l insuran urance broker‖ is a company licensed under the External Insurance Act, 2009 (not being an external insurer) who, for commission or other compensation brings together, with a view to carrying on external insurance business, persons seeking insurance or reinsurance and insurance or reinsurance undertakings, carries out work preparatory to the conclusion of contracts of insurance or reinsurance, and where appropriate, assists in the administration and performance of such contracts.

rnal l insuranc urance business‖ means insurance business where the risk is located outside The Bahamas.

―insurance‖ includes ―reinsurance‖ unless the context requires otherwise.

―insurance business‖ means the business of effecting and carrying out contracts of general insurance business, long term insurance business and any other form of insurance business and including but not limited to :-

• protecting persons against loss or liability to loss in respect of risks to

which such persons may be exposed; or

• to pay to a person a sum of money or other thing of value upon the

happening of an insurable event, and includes running-off insurance business including the settlement of claims

―insurance manager‖ means a person that provides or holds himself out as providing insurance management services to one or more persons.

―insurance management services‖ includes the provision of accounting, administrative, brokerage, underwriting, and claims processing services in respect of external insurance business.

premiums or other considerations paid by the licensee for reinsurance.

country or territory outside The Bahamas, exercises functions corresponding to any functions of the Commission or the Superintendent.

ent or princip cipal l represe sentat ntativ ive‖ means a licensee’s management company or such individual as the Commission approves for the purpose of managing the business of a licensee.

ricte cted external nal insure urer‖ means an external insurer that only underwrites the risks of:-

• its members, subsidiaries and affiliates; reinsureds, not being members,

subsidiaries and affiliates, who acknowledge in writing that they know and accept that the external insurer is a restricted insurer; and,

• such other persons as the Commission may approve.

not a restricted external insurer.

―superintendent‖ means the Superintendent of Insurance appointed pursuant to the provisions of the First Schedule of the Insurance Act (Act

• No. 16 of 2005).

―variab iable le insura urance nce busines iness‖ means insurance business, under a policy

• r contract, in respect of which the benefits payable under the policy are

to be determined wholly or partly:-

• according to the investment experience of a separate account or

accounts owned and maintained by the licensee in respect of that policy or class of policy, separate and apart from the general account

• f the licensee and insulated from the claims of the licensee involved

as provided herein;

• by reference to the value of or income from property of any

description allocated in the general accounts of the licensee in respect

• f that policy or class of policy whether in that policy; or
• by reference to fluctuations in or in an index of, the value of property
• f any description, whether specified in the policy, and includes

variable life insurance business and variable annuity business.

 Determine Registration pre-EIA, 2009  Carrying on External Insurance (EI) business?  Completion of modified Form – Part A (First

Schedule)

 EIA- in-force 19 August , 2009  Companies registered under EIA, 1986 or

• r IA

1969

includes —

(a) opening or maintaining a place of business or an office,

• r appointing or using a representative in The Bahamas,

whether or not insurance business is being arranged in

• r from The Bahamas; and

(b) the use in The Bahamas amas of any busine ness ss descript ription

• n or

busine iness ss title, in any language uage whateve ver, r, of the words

―insurance‖, assurance‖, ―indemnity‖, ‖guarantee‖,

―underwriting‖, ―reinsurance‖, ―surety‖, ―casualty‖, or

any of their r derivat vative ives, s, or any express ssion

• n which

connot

• tes or is intend

nded to connote te insuranc rance busine ness ss;

(c) the making in The Bahamas of any representation in any

handbill, letter, letterhead, circular, advertisement, paper

notice, or in any manner whatsoever offering, either

directly or indirectly, to arrange contracts of insurance;

(d) the assum umpt ptio ion n of the obligati ation

• n of a compan

any y to cover

risks ks or liabilities ities in any class ss of insuran ance ce busine ness; s; and

(e) insurance rance busine ness ss where e the risk is located ed outsi side de The

Baham hamas as;

 4(1) No person shall carry on external

insurance business from within The Bahamas, nor hold himself out as carrying on external insurance business from within The Bahamas, wi without ut a licence issued ued under er this Act.

 3. An external insurer licensed under this Act,

shall not, in respect of external insurance business carried on by him, be subject to any

• f the provisions of the Insurance Act (Act
• No. 16 of 2005).

 Unless otherwise stated in this Act, with

respect to a company carrying on external insurance business in The Bahamas immediately prior to the coming into force of this Act, the period of time within which such company shall comply y wi with this Act, the reg egulatio ulations ns or any portion thereof, shall be twelve months or such longer period of time as the Commission may designate.

 (No

Now w ->30 30 Se Sept 20 2010 10)

 Use Application Form – First Schedule – Part A

(Modified) –EIA (Forms and Fees) Regulations , 2009 to compile information needed

 4(5) No applicant may be granted a licence under

a name, or using a trade name or mark that in the opinion of the Commission may mislead or confuse persons for whom the proposed licensee intends

 Name should

d have - ―insurance‖, assurance‖, ―indemnity‖, ‖guarantee‖, ―underwriting‖, ―reinsurance‖, ―surety‖, ―casualty‖, or any of their derivatives, or any expression which connotes or is intended to connote insurance business

 ―restricted external insurer‖

means ns an external rnal insurer urer that only underwrites the risks of — (a) its members, subsidiaries and affiliates; (b) reinsureds, not being members, subsidiaries and affiliates, who acknowledge in writing that they know and accept that the external insurer is a restricted external insurer; (c) such other persons as the Commission may approve;

 ―affiliate‖ means a company which —

(a) stands in relation to another company by reason of their membership in common of an affiliated group; (b) stands in relation to another company by reason of their participation or the participation of their affiliates, as defined at (a) above, in a joint venture in which the participants will share revenue or profits; or (c) is, in relation to another company, a member of the same group of companies by virtue of common ownership or control;

 ―affiliated group‖ means one or more chains of companies

connected through ownership with a common parent;

 Except -  6(d)

 Unrestricted:  General Insurance - $100,000  Long-Term -

$200,000

 Both-

$300,000

 (Will accept for Restricted)

 General:

Unrestricted – Detailed Restricted – Determined by Commission – (calculate same as unrestricted)

 Long term:

Assets > Liabilities

In order for all e external insurer ers s to re-regi egist ster er, , the company must be solven ent. t. PART IV of the External Insurance Act, 2009 Section 31, ―Margin of solvency‖ states es:

Unless the Commission otherwise determines, an unres estr trict cted ed externa ernal insur urer r carrying on GENERAL RAL INSURA RANCE BUSIN SINESS SS is unable to pay its debts if at any time after the expiration of the first financial year, the value of its assets does not exceed its liabilities- a) By 1/5 of the premium income for the preceding financial year, where the premium income does not exceed five million dollars; and b) By the aggregate of one million dollars and 1/10 of the amount by which the premium income in the preceding financial year exceeded ten million dollars where the premium income for that year exceeded five million dollars.

A restricted external insurer carrying on GENERAL RAL INSURA RANCE BUSIN SINESS SS is unable to pay its debts if at any time the value of its assets does not exceed its liabilities by such amount as the Commission may prescribe from time to time.

A licensee carrying on LONG-TERM TERM INSURANCE CE BUSINESS SS is unable to pay its debts if the value of its assets does not exceed its liabilities.

In computing a licensee’s liabilities, all contingent and prospective liabilities, other than liabilities in respect of share capital and surplus, are to be taken into account.

In computing the assets and liabilities of a licensee carrying on VARIABLE BLE INSURAN RANCE E BUSINESS ESS, there shall not be included in such computation, the assets of any one or more separate accounts maintained by the licensee in respect of its variable insurance business, or the liabilities chargeable against such accounts in respect of such business, nor any assets acquired and held in a fiduciary capacity as designated by its auditor in financial statements filed with the Commission.

ASSETS ETS includ lude:

Cash

Bonds, debentures, fixed deposits, and equities listed on a recognized stock exchange, or legally recognized inter-dealer market

Mortgage loans on real estate

Net accrued investment income due

Premiums receivable

Reinsurance balance receivable

Funds held by ceding reinsurers

Accounts receivable (except from a person with whom the external insurer is associated, unless approved by the Commission)

Irrevocable letters of credit drawn or confirmed by a bank licensed under the Bank and Trust Companies Act (Chap. 316); and

LIABI ABILIT LITIES ES INCLUD UDE: E:

Loss reserves and unearned premiums

Outstanding liabilities, but do not include capital and surplus.

 Except for :  10 & 11 – bank and personal references  12 - police certificates

 To be completed

 Classes as per Regulations on Classes  Except (g), (h), (i), (j)

External Insurance Act, 2009 And External Insurance Regulations, 2010

A. A. Gener eneral al Ins nsur urance Bus ance Busines iness 1. accident insurance business 2. liability/peril insurance business including: (a) directors and officers liability insurance (b) employer’s liability insurance (c) personal liability insurance (d) product liability insurance (e) public liability insurance (f) third party liability (g) title insurance 3. marine, aviation, and transport insurance business 4. motor vehicle insurance business 5. pecuniary loss insurance business including: (a) credit insurance (b) credit protection insurance (c) mortgage insurance (d) surety insurance 6. property insurance business

External Insurance Act, 2009 And External Insurance Regulations, 2010

• 1. industrial life insurance business
• 2. ordinary life insurance business
• 3. variable

life insurance business including: a) unit-linked insurance b) universal life insurance

• 4. sickness or health insurance business,

including: a) group health; b) permanent health insurance

• 5. pension fund management
• 6. annuities
• 7. variable annuity business

 To be completed

 Biographical affidavit of directors,

shareholders or senior managers that we do not have in our file (The Commission will advise)

 Enclose copy AML/CFT policies and

procedures(if applicable-Life Companies)

 Corporate Governance Policy & Procedures (if

any)

 Describe books and records that are kept in

Th The e Ba Bahamas mas

 No Re-registration fees

External Insurance Act, 2009 And External Insurance Regulations, 2010 LICENSE FEES I. Insurance renewal / license fees become due and payable on the last day of the twelfth month following the initial or previous license. II. Failure to pay any renewal/ annual license fee within a period of (30) thirty days after the date

• n which such fee becomes due and payable,

shall, in respect of the respective license for that year, pay to the Commission in addition to the appropriate annual license fee payable, a late fee.

• III. A license / renewal fee which remains unpaid

after thirty days from the due date may be recovered as a debt due in civil proceedings.

• IV. The Commission may suspend the license of any

person where the license fee remains unpaid for more than ninety days from the due date.

External Insurance Act, 2009 And External Insurance Regulations, 2010 FEES-Application and Annual License

(less the fees paid under the companies act- External insurer ONLY)

External Insurance Act, 2009 And External Insurance Regulations, 2010

External Insurance Act, 2009 And External Insurance Regulations, 2010

Some of you have asked the Commission:

• Why is a Resident representative necessary?
• Was a Resident representative required under the 1983 Act?
• Who qualifies for the position of Resident representative?
• How does one select a Resident representative?

Your questions have not fallen on deaf ears. It is importa rtant nt to note that:

• The RESID

IDENT ENT REPRES ESENTATIVE ENTATIVE will be the key person with whom the Commission will communicate and, will hold accountable for an external insurer’s business activities.

• No, the RESIDENT

IDENT REPRE RESENT ENTATIV ATIVE post was not a requisite under the 1983 External Insurance Act.

• RESIDENT

IDENT REPRE RESENT ENTATIV ATIVE position is a significantly important statutory requisite that must be adhered to and must be held by a fit and proper individu dual. al.

 ―resident representative‖ means a licensee’s

management company (Insurance Manager)

• r such individual as the Commission

approves for the purpose of managing the business of a licensee

For the purposes of this INFORM ORMATI ATION ON Fit and Proper Person/Responsible Person definitions are as follows:

dishonesty, money laundering or fraud.

management of insurance business.

judgment.

policy holders, i.e. deceitful, improper or oppressive business practices.

execution of one’s prescribed duties.

prescribed by the applicable Law of The Bahamas.

Although The Insurance Commission of The Bahamas analyzes and conducts due diligence of proposed: Fit and proper persons, , Resident ent represen entati atives ves (if not Insuranc rance e Manag ager) er), Directors, and Senior officers, shareholders >10% and assesses their competence levels, it is ultimately the responsibility of Senior Management and, or a Company’s Corporate Board to ensure the suitability and integrity of authorized officers. Even after a license is issued, the assessment of suitability, integrity and capabilities of Resident representatives, Principal representatives, and other Executives are ongoing and up dated assessments may be conducted if and when The Insurance Commission of The Bahamas mandates.

Consequently, the Commission requires an assessment

• f fitness and propriety in the prescribed form that is

based on International Association of Insurance Supervisors (IAIS) Standards, i.e. A Bi A Biographi graphical cal Af Affid idavi avit to be filled in and signed by the appropriate individual(s). This also includes information on:

• professional acumen;
• resume;
• financial capacities;
• passport identification; and,
• confirmation that the fit and proper person has not

been held liable in a civil proceeding in connection with financial or mismanagement conduct.

 ―Any false or misleading reply to the Biographical

Affidavit or deliberate withholding of crucial information should be considered a strong indication that the individual lacks integrity.‖ [IAIS IS-Sta Standa ndard rd on fi fit and proper persons]

 The Insurance Commission of The Bahamas will

not tolerate persons who lack integrity or the required qualifications or those who do not adhere to the prescribed Fit and Proper/Responsible Person INFOR ORMAT MATION ION after an insurance license has been granted.

Forms are available at The Insurance Commission of The Bahamas upon request.

IAIS Paper on Regulation and Supervision of Captive Insurance Companies http://www.iaisweb.org/__temp/Issues_paper_

• n_regulation_and_supervision_of_captive_ins

urance_companies.pdf

 IN

INSURAN URANCE CE MA MANAGER GERS

 &

&

 BROKERS

KERS

 39.

. Existi sting g underwr erwritin iting g managers. gers.

 A company which, immediately before the

commencement of this Act, was carrying on business in The Bahamas as an underwriting manager or an external insurance broker, and which intends to continue to carry on similar business on and after the commencement of this Act shall, within thin one month th (Extended tended to 30 Se Sept 2010) ) of the commencement of this Act, make an application for licensing under section 33, and in the event of such a company making such an application it shall not be taken for the purpose of this Act to be acting or to have acted in contravention of section 23 pending the determination of its application.

 Cannot carry on domestic insurance business

 Complete Form –PART B  Complete all sections except:

• 4( c) & 5 – unless advised by the

Commission,

• 7 & 8
• Additional:
• Copy Professional Indemnity Policy

External Insurance Act, 2009 And External Insurance Regulations, 2010 Registered Insurance Manager/ Intermediaries with a minimum paid-up share capital and, minimum net assets value, shall be maintained at all times by every insurance manager/ intermediaries and those minimum amounts shall be the greater of the following: a) The maximum deductible amount of the insurance manager’s professional indemnity insurance policy; OR b) $10,000.00 External Insurance Broker/Intermediaries shall at all times maintain a minimum paid-up share capital and minimum assets value: (a) At an amount which does not exceed the maximum deductible amount of the broker’s professional indemnity insurance policy OR (b) $25,000.00, whichever is greater.

External Insurance Act, 2009 And External Insurance Regulations, 2010 The minimum net asset values outlined in points 21 & 22 shall be determined in accordance with International Financial Reporting Standards, excluding intangible assets. Where an Insurance Manager or External Insurance Broker carrying on external insurance business in The Bahamas at the commencement of The External Insurance (Capital Requirements for External Insurers, Insurance Managers and External Insurance Brokers) Regulations, 2010, i.e. May 3, 2010, is unable to meet the requirements in points 21 & 22: The Commission may, if satisfied that the Insurance Manager or External Insurance Broker is unable to increase its capital to the amount so required by the expiry of three years from the commencement of the Regulations, issue a license pursuant to Section 8. (1) Of the External Act which states: “When the Commission is satisfied that it is proper to do so, it may approve or refuse a license under this Act.”

External Insurance Act, 2009 And External Insurance Regulations, 2010

Professional indemnity policy with a minimum limit of indemnity for any one claim, in any one insurance period of twelve months is required for every Insurance Manager and External Insurance Broker who shall:

• f

Professional Indemnity policy limits are:

External Insurance Act, 2009 And External Insurance Regulations, 2010

Professional indemnity insurance coverage which exceeds the amounts stated in point 26:

If you require additional information or have to advise us of a change of address or material change of any Director or Officer, please contact us at: The Insurance Commission of The Bahamas International Insurance Department 3rd Floor, Charlotte House Charlotte and Shirley Streets P.O. Box N-4844 Nassau, Bahamas OR: Telephone: 242-356-5716 / 242-397-4100 Facsimile: 242-328-1070 E-mail: info@icb.gov.bs

Thank You!!